Strategic Distribution works to soften revenue loss

For the full year of 2002, Strategic Distribution, Inc. reported revenues of $253.6 million compared to $319.6 million in 2001. The decline in revenues is principally attributable to the termination of certain services agreements, including Kraft, along with economic weakness within the manufacturing and energy sectors, partially offset by new agreements added in the past twelve months. Kraft revenues in 2002 were $77.0 million compared to $86.1 million in 2001. The weakened U.S. economy has reduced same store revenues by approximately $10 million in 2002 compared to 2001, for stores opened at least a year. The remainder of the decline in revenues is attributable to the termination of services agreements, other than Kraft, partially offset by new agreements added in 2002.

The company reported a net loss of $3.4 million for the full year of 2002, which includes $4.5 million of Kraft termination related severance costs and long-lived asset impairment expenses, profit of $1.7 million on the second quarter $26.2 million Kraft inventory sale, a $0.9 million benefit related to a more favorable conclusion of previously estimated contract termination matters, a $0.3 million insurance recovery benefit and a $1.9 million non-cash charge related to the first quarter adoption of the new accounting standard for goodwill. This compares to a net loss of $13.1 million or $4.25 per share for the same period of 2001, which included $7.7 million of charges for uncollectible accounts. Excluding these items in both periods, there was a $5.5 million improvement in 2002 net loss compared to 2001, attributable to eliminating unprofitable contracts, adding new profitable contracts and reducing costs.

Strategic Distribution's CEO, Don Woodring, commented on the results stating, "We are pleased that our hard work in 2002 produced significantly better results than the prior year. In spite of a soft economy, we were able to improve the net loss within our core business by more that $5 million. While we continue to maintain a sharp focus on costs and productivity, we believe that we are well positioned to build upon a good base of business with profitable new contracts."